Former Herbalife distributors say they were ripped off in a new short film

Bill Ackman launched his latest attack against Herbalife on Friday, releasing a highly critical video about the company at an event in New York.

The billionaire hedge fund manager, who stands to gain $1 billion if Herbalife's (HLF) stock price collapses, unveiled the 13-minute video featuring interviews with former distributors who say they were victimized by the company.

Ackman, who spoke briefly at Friday's event, said his Pershing Square hedge fund is not compensating the former distributors beyond paying their travel costs, hotel bills and providing a small per diem while they are in New York. However, he said the fund has indemnified them against any potential litigation by Herbalife.

The video marks the latest phase in a more than year-old campaign Ackman has waged against Herbalife, which he believes is a pyramid scheme.

Ackman argues that Herbalife is a pyramid scheme because it makes more money by recruiting new distributors than it does selling products to consumers. He says the company deliberately targets Latinos and other vulnerable immigrant groups.

Federal law enforcement officials have confirmed to CNN that the FBI and U.S. Justice Department are also looking into Herbalife, though the company has not commented on any criminal investigation.

In the film, the former distributors describe how they lost tens of thousands of dollars after being led to believe they would be able to earn up to $10,000 a month selling Herbalife products from home.

The former members of Herbalife's vast direct sales network all said they were encouraged to bend the truth when presenting the "business opportunity" to potential new members of the system.

"It's really not about selling Herbalife," one says. "It's really about getting people's money by bringing them into the business."

Herbalife dismissed the film before it came out. The company released a statement Thursday saying the video was "nothing more than propaganda."

"The company believes this is yet another tactic in Mr. Ackman's calculated, coordinated and well-funded effort to destroy a 34-year old company and support his $1 billion bet against Herbalife," the statement reads.

Herbalife also seized on the fact that veteran journalist Connie Chung had backed out of the event at the last minute. Chung was scheduled to moderate a panel discussion with some of the former distributors Friday, but she apparently had some reservations.

"I intended to fully vet every aspect of this complicated story but concluded I needed a team of researchers, which I did not have at my disposal," Chung is quoted as saying in a statement released by Pershing. "There were too many levels and sides to the story."

Herbalife said Chung's decision is a sign that the film is "misleading propaganda designed to help achieve [Ackman's] ultimate goal of enriching himself by driving down Herbalife's stock."

For his part, Ackman pointed to Herbalife's recent decision to buy back more than $1 billion worth of its own stock, a tactic he says is designed to prop-up the company's share price and limit the amount of money that can be recovered by potential victims.

"Most companies try to buy back stock at lowest possible price," he said. "It appears to us that Herbalife is buying back stock at the highest possible price in order to prop up the stock."

Shares of Nu Skin (NUS) surged nearly 20% Monday after China announced a minimal fine to the skin care sales and marketing company. Investors had feared a far worse punishment. Shares of fellow multi-level marketer Herbalife (HLF) are up as well as investors shrug off hedge fund honcho Bill Ackman's concerns about similar sales violations.

China's Administration of Industry and Commerce is penalizing Nu Skin only $781,000. The slap on the wrist breaks MORE

Shares of Herbalife dropped more than 8% Wednesday after the nutritional products distributor revealed that was being investigated by the Federal Trade Commission. Trading of the stock was briefly halted prior to the announcement.

"Herbalife welcomes the inquiry given the tremendous amount of misinformation in the marketplace," the company said in a statement. "Herbalife is a financially strong and successful company, having created meaningful value for shareholders, significant opportunities for distributors MORE

Bill Ackman has said he will go "to the end of the earth" to bring down Herbalife. Tomorrow, he will take the fight to China.

The hedge fund billionaire plans to unveil new evidence Tuesday that he says shows Herbalife (HLF), which sells nutritional supplements through a network of independent distributors, is operating in violation of Chinese law.

Here's a fun fact: The stock market, as measured by the S&P 500 (SPX), had its strongest performance this year since the Wolf of Wall Street roamed lower Manhattan.

The broad market gauge has gained 29.6% in 2013, its biggest jump since 1997 -- the year before Jordan Belfort, the hard-partying founder of brokerage firm Stratton Oakmont, was indicted for securities fraud and money laundering.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

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KPMG has resigned as auditor of Herbalife and Skechers after learning that a senior partner in its Los Angeles office had allegedly provided insider information about the companies to an outside party, who traded on the information.

KPMG declined to comment about the companies' identities. Both Herbalife and Skechers confirmed the news in statements.

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